This blog, written by Thomas E. Rutledge, focuses primarily on business entity law in Kentucky. Postings on contract law, contractual and statutory construction, and the entity law of other jurisdictions appear as well. There may as well be some random discussions of classical, medieval and renaissance history.

Tuesday, September 24, 2013

Court of Appeals Addresses Requirements for Enforcement of Choice of Venue

Court of Appeals
Addresses Requirements for Enforcement of Choice of Venue

In a recent decision of the
Kentucky Court of Appeals, it returned to the trial court for further findings its
determination to enforce a choice of venue provision in a written contract.Robinson
v. Colorado Personnel Resources Inc., 2013 WL 5050489 (Ky. App. Sept. 13,
2013).This opinion is designated as
“Not To Be Published.”

Robinson, a certified
registered nurse anesthetist, entered into a one-year agreement with Colorado
Personnel Resources (“CPR”).Six months
into the agreement, CPR terminated that agreement, and in response Robinson
filed suit in Jefferson Circuit Court.CPR, in turn, filed a motion to dismiss the action on the basis of a
choice of forum provision in its agreement with Robinson, that provision
providing:

The laws of the State of Colorado
shall govern this agreement.Any dispute
arising under the term or execution of this agreement shall be submitted to
arbitration in the State of Colorado pursuant to the laws of the State of
Colorado.

In response to CPR’s motion,
the trial court entered an order pursuant to which it “declines to exercise
jurisdiction in this matter as a result of the parties’ selection of forum, and
that this action is thereby dismissed.”

The Court of Appeals noted that
Kentucky has adopted § 80 of the Restatement
(Second) Conflict of Laws, it providing, inter alia, that a venue selection will be given effect unless it
is unfair or unreasonable.In reliance
upon Prezocki v. Bullock Garages, Inc.,
938 S.W.2d 888, 889 (Ky. 1997), it stated that the following will be applied in
determining whether the venue clause is either unfair or unreasonable, namely:

·Inconvenience of the
chosen forum;

·Disparity in bargaining
power between the parties; and

·Whether Kentucky
maintains more than a minimal interest in the dispute.

In
this instance, the Court of Appeals acknowledged that the trial court may have undertaken
this analysis, but the record was silent as to whether or not it did so.Signaling an apparent lack of concern with
the substance of the decision and critiquing only its form, the Court of
Appeals wrote:

While trial court likely reached the
proper conclusion in dismissing the action, because it did not make the
appropriate findings as to the reasonableness of the choice of forum provision
in the parties’ agreement, we must reverse and remand for further proceedings.
On remand, the trial court is directed to make findings on the record in
conformity with Prudential [Resources Corp. v. Plunkett, 583 S.W.2d
97 (Ky. App. 1979)].

At least two consequences need
to be recognized.First, in any
contractual action, it appears that the party seeking enforcement of a choice
of venue is going to be saddled with an affirmative burden to demonstrate the reasonableness
of that provision.This burden is only
going to give rise to additional, likely unjustified, arguments by a
counterparty who, for whatever reason, seeks to avoid the choice of venue.Second, with respect to transactional
attorneys, decisions of this nature, qualifying the effectiveness of a
contractual provision upon an ex-post facts and circumstances analysis, make it
more difficult to give legal opinions and other assurances as to the
enforcement of agreements as written.